供应链设计与管理（第3版）英文版

Chapter1Introductionto

SupplyChainManagementWhatIsaSupplyChain?Flowofproductsandservicesfrom:RawmaterialsmanufacturersIntermediateproductsmanufacturersEndproductmanufacturersWholesalersanddistributorsandRetailersConnectedbytransportationandstorageactivitiesIntegratedthroughinformation,planning,andintegrationactivitiesCostandservicelevels1.1WhatIsSupplyChainManagement?Supplychainmanagementisasetofapproachesutilizedtoefficientlyintegratesuppliers,manufacturers,warehouses,andstores,sothatmerchandiseisproducedanddistributedattherightquantities,totherightlocations,andattherighttime,inordertominimizesystemwidecostswhilesatisfyingservicelevelrequirements.TwoOtherFormalDefinitionsThedesignandmanagementofseamless,value-addedprocessacrossorganizationalboundariestomeettherealneedsoftheendcustomerInstituteforSupplyManagementManagingsupplyanddemand,sourcingrawmaterialsandparts,manufacturingandassembly,warehousingandinventorytracking,orderentryandordermanagement,distributionacrossallchannels,anddeliverytothecustomerTheSupplyChainCouncilPCIndustrySupplyChainTracingbackthescreenyoustareatforthebulkofyourtime.Cisco’sValueNetworkSourceSupplierSupplierDistributorDistributorRetailerEnd-UserConverterConverterConsumersInformationFlowFunds/DemandFlowValue-AddedServicesMaterialFlowReuse/Maintenance/AfterSalesServiceFlowSCMDefinitionTheSCMNetworkFIGURE1.1:ThelogisticsnetworkKeyObservationsEveryfacilitythatimpactscostsneedtobeconsideredSuppliers’suppliersCustomers’customersEfficiencyandcost-effectivenessthroughoutthesystemisrequiredSystemlevelapproachMultiplelevelsofactivitiesStrategic–Tactical–OperationalOtherRelatedObservationsSupplychainstrategylinkedtotheDevelopmentChainChallengingtominimizesystemcostsandmaximizesystemservicelevelsInherentpresenceofuncertaintyandriskSetofactivitiesandprocessesassociatedwithnewproductintroduction.Includes:productdesignphaseassociatedcapabilitiesandknowledgesourcingdecisionsproductionplans1.2TheDevelopmentChain1.2TheDevelopmentChainFIGURE1-2:Theenterprisedevelopmentandsupplychain1.3GlobalOptimizationGeographicallydispersedcomplexnetworkConflictingobjectivesofdifferentfacilitiesDynamicsystemVariationsovertimeMatchingdemand-supplydifficultDifferentlevelsofinventoryandbackordersRecentdevelopmentshaveincreasedrisksLeanproduction/Off-shoring/OutsourcingGlobalApparelValueChain

TracingbackthedressyouarewearingQC&Shipping[HongKong]ProductDesign[HongKong]Zippers+…[Japan+…]Stitching[Indonesia]Weaving[Taiwan]YarnSpinning[Korea]AnIllustration:HowLi&FungLimitedMightMakeaDressGloballyDispersedManufacturing1.4UncertaintyandRiskFactors

MatchingSupplyandDemandaMajorChallengeREASONSEXAMPLESRawmaterialshortagesInternalandsupplierpartsshortagesProductivityinefficienciesBoeingAircraft’sinventorywrite-downof$2.6billionSalesandearningsshortfallLargerthananticipatedinventoriesSalesatU.S.SurgicalCorporationdeclined25percent,resultinginalossof$22millionStiffcompetitionGeneralslowdowninthePCmarketIntelreporteda38percentdeclineinquarterlyprofitHigherthanexpectedordersfornewproductsoverexistingproductsEMCCorp.misseditsrevenueguidanceof$2.66billionforthesecondquarterof2006byaround$100million1.4UncertaintyandRiskFactors

FluctuationsofInventoryandBackordersthroughouttheSupplyChainFIGURE1-3:OrdervariationsinthesupplychainForecastingisnotasolutionDemandisnottheonlysourceofuncertaintyRecenttrendsmakethingsmoreuncertainLeanmanufacturingOutsourcingOff-shoring1.4UncertaintyandRiskFactorsAugust2005–HurricaneKatrinaP&GcoffeesuppliesfromsitesaroundNewOrleansSixmonthimpact2002WestCoastportstrikeLossesof$1B/dayStorestock-outs,factoryshutdowns1999TaiwanearthquakeSupplyinterruptionsofHP,Dell2001India(Gujaratstate)earthquakeSupplyinterruptionsforapparelmanufacturers1.4UncertaintyandRiskFactors1.5EvolutionofSupplyChainManagement1950s1960s1970s1980s1990s2000sBeyondTraditionalMassManufacturingInventoryManagement/CostOptimizationJIT,TQM,BPR,AlliancesSCMFormation/ExtensionsFurtherRefinementofSCMCapabilitiesProgressionofLogisticsCostsFIGURE1-4:Logisticscosts’shareoftheU.S.economyCompositionofLogisticsCostsFIGURE1-5:TotalU.S.logisticscostsbetween1984and20051.6Complexity:TheMagnitudeU.S.companiesspendmorethan$1trillioninsupply-relatedactivities(10-15%ofGrossDomesticProduct)Transportation58%Inventory38%Management4%Thegroceryindustrycouldsave$30billion(10%ofoperatingcost)byusingeffectivelogisticsstrategiesAtypicalboxofcerealspends104daysgettingfromfactorytosupermarket.Atypicalnewcarspends15daystravelingfromthefactorytothedealership.Complexity:TheMagnitudeCompaqcomputer’slossof$500millionto$1billioninsalesinoneyearLaptopsanddesktopswerenotavailablewhenandwherecustomerswerereadytobuythemBoeing’sforcedannouncementofwrite-downsof$2.6bRawmaterialshortages,internalandsupplierpartsshortages….

Cisco’smulti-billion($2.2b)dollarwrite-offofinventoriesin2001-2002CustomersbalkedonordersduetomarketmeltdownTransactionalComplexityNationalSemiconductors:Production:Produceschipsinsixdifferentlocations:fourintheUS,oneinBritainandoneinIsraelChipsareshippedtosevenassemblylocationsinSoutheastAsia.DistributionThefinalproductisshippedtohundredsoffacilitiesallovertheworld20,000differentroutes12differentairlinesareinvolved95%oftheproductsaredeliveredwithin45days5%aredeliveredwithin90days.PCValueChain

PerformanceofTraditionalPCManufacturerPCValueChain:FocusonCostReduction

PerformanceofDellComputersMagnitudeofSupplyChainCosts

CostElementsofaTypicalTradeBookMagnitudeofSupplyChainCosts

Example:TheApparelIndustryManufacturerDistributorRetailerCustomerCostperPercentShirtSaving$52.720%$41.3428%$20.4562%ManufacturerDistributorRetailerCustomerManufacturerDistributorRetailerCustomerSupplyChain:ThePotentialP&G’sestimatedsavingstoretailcustomersof$65millionthroughlogisticsgainsDellComputer’soutperformingofthecompetitionintermsofshareholdervaluegrowthovermorethantwodecadesbyover3,000%using:DirectbusinessmodelBuild-to-orderstrategyWal-Marttransformationintotheworld’slargestretailerbychangingitslogisticssystem:highestsalespersquarefoot,inventoryturnoverandoperatingprofitofanydiscountretailer1.7KeyIssuesinSupplyChainManagementChainGlobalOptimizationManagingRiskandUncertaintyDistributionNetworkConfigurationSupplyYInventoryControlSupplyYProductionSourcingSupplyYSupplyContractsBothYYDistributionStrategiesSupplyYYStrategicPartneringDevelopmentYOutsourcingandOffshoringDevelopmentYProductDesignDevelopmentYInformationTechnologySupplyYYCustomerValueBothYYSmartPricingSupplyYTABLE1-1:Keysupplychainmanagementissues1.8BookObjectivesandOverview•Inventorymanagement•Logisticsnetworkplanning•Supplycontractsforstrategicaswellascommoditycomponents.•Thevalueofinformationandtheeffectiveuseofinformationinthesupplychain.•Supplychainintegration.•Centralizedanddecentralizeddistributionstrategies.•Strategicalliances.•Outsourcing,off-shoring,andprocurementstrategies.•Internationalsupplychainmanagement.•Supplychainmanagementandproductdesign.•Customervalue.•Revenuemanagementandpricingstrategies.•Informationtechnologyandbusinessprocesses.•Technicalstandardsandtheirimpactonthesupplychain.SoftwarePackagesComputerizedBeerGameRiskPoolGameProcurementGameCASE:MeditechSurgicalIntent–diagnosisofsupplychainBusinessoverviewSupplychainProductionplanningWhat’swrong?Howtofixit?EndoscopicSurgicalInstrumentsPermitsminimallyinvasivesurgeryMarketcreatedinearly80’s,rapidlygrowingOldproductscontinuallyupdatedandreplacedwithnewproductintroductionsBusinessOverviewNationalandMeditechsplitthemarketCompetebasedonproductinnovations,customerservice,costNationalsellstophysicians;MeditechsellstomaterialmanagersCustomerpreferenceschangeslowlyExternalSupplyChainPartsuppliersMeditechAssemblyMeditechWarehouseDomesticDealersInt’lMeditechAffiliatesHospitalsHospitalsInternalSupplyChainPartsInventoryAssemblyBulkInventoryFGInventoryPackaging&Sterilization2-16weeks2weeks1weekProductionPlanningAnnualForecastMonthlyRevisionTransferRequirementsMonthlyPlanMRPPartsProcurementPlanWeeklyAssemblyScheduleProductionPlanningPartsInventoryAssemblyBulkInventoryPackaging&SterilizationFGinventoryMonthlyPlanMRPOrderpoint;OrderquantityMaterialPlanWhat’sWrong?PoorservicefornewproductintroductionsPoorforecasting?Panicordering?AndhighFGinventoryWhatIsGoingOn?DemandisquitepredictableUsageinhospitalsisquitestableMarketsharemovesslowlyovertimeWitheachnewproduct,dealermustbuildinventorytofillpipelineWhyDidMeditechThinkDemandWasUnpredictable?PoorinformationsystemsNoonelookedatdemandNoonehadresponsibilityforforecasterrorsTendencytoshifttheblameBuilt-indelaysandmonthlybucketsinplanningsystemAmplifierinplanningsystemWhattoDo?RecognizethatdemandisstableandpredictableEstablishaccountabilityforforecastEliminateplanningdelaysand/orreducetimebucketAlternatively,putassemblywithinpullsystemandeliminatebulkinventoryChapter2Inventory

Management

andRiskPoolingCASE:SteelWorksBackgroundofcaseandintentOverviewofbusinessWhatdoesdatatellyouaboutSpecialty?Howmuchinventorymightyouexpect?WhatopportunitiesarethereforCustom?WrapupStephenC.GravesCopyright2003AllRightsReservedBackground&IntentAbstractionfromsummerconsultingjobIntentistoexaminearealistic,butsimplifiedinventorycontextandperformadiagnosisofproblem–poorserviceandtoomuchinventoryStephenC.GravesCopyright2003AllRightsReservedCustomProductsRapidgrowth,1/3oftotalsales($133MM)OnecustomerperproductVeryhighmarginsHighservicelevel3plants,co-locatedwithR&DcenterEachproductproducedatasingleplantStephenC.GravesCopyright2003AllRightsReservedSpecialtyProductsRapidgrowth,2/3oftotalsales($267MM)6productfamilies3plants,eachproducing2productfamilies130customers,120productsFewbigcustomersHighlyvolatiledemandHighservicelevelStephenC.GravesCopyright2003AllRightsReservedConsultantRecommendationDroplowvolumeproductsImproveforecastsConsolidatewarehousesStephenC.GravesCopyright2003AllRightsReservedWhatDoesDataTellYou?mscvDBR1015.513.20.85DBR1210082560.25DBR1524644940.20DFR109792.50.95DFR1218.511.40.62DFR1555801.46DFR2335.545.91.29StephenC.GravesCopyright2003AllRightsReservedWhatDoesDataTellYou?DurabendR12:Onecustomeraccountsfor97%ofdemand7products:Highvolume(2)isnotveryvolatileLowvolume(5)isveryvolatileStephenC.GravesCopyright2003AllRightsReservedHowMuchInventoryShouldYouExpect?AssumebasestockmodelwithperiodicreviewReviewperiod=r=?Leadtime=L=?StephenC.GravesCopyright2003AllRightsReservedmsCyclestockSaf.stockE[I]Act.Inv.DBR1015.513.28263472DBR1210082565045101014740DBR152464494123299022221875DFR109792.549185234604DFR1218.511.49233255DFR15558028160188388DFR2335.545.91892110190S1848198638343824Assumesr=1;L=0.25;andz=1.8Cyclestock=rm/2 Safetystock=zs

r+LStephenC.GravesCopyright2003AllRightsReservedWhatAretheOpportunitiesatCustom?Combineproductionandinventoryforcommonitems,e.g.DFR23Producemonthly:reducesetupsbyhalfandpoolsafetystocksProducetwiceamonth:samenumberofsetupsbutcutcyclestockandreviewperiodinhalfStephenC.GravesCopyright2003AllRightsReservedWrapUpRealisticdiagnosticexerciseInreallife:notasclean,moredataandmoreconsiderationsYetsimplemodelsandprinciplescanprovidevaluableguidanceStephenC.GravesCopyright2003AllRightsReserved2.1Introduction

WhyIsInventoryImportant?Distributionandinventory(logistics)costsarequitesubstantial

TotalU.S.ManufacturingInventories($m):1992-01-31:$m808,7731996-08-31:$m1,000,7742006-05-31:$m1,324,108Inventory-SalesRatio(U.S.Manufacturers):1992-01-01:1.562006-05-01:1.25GM’sproductionanddistributionnetwork20,000supplierplants133partsplants31assemblyplants11,000dealersFreighttransportationcosts:$4.1billion(60%formaterialshipments)GMinventoryvaluedat$7.4billion(70%WIP;RestFinishedVehicles)Decisiontooltoreduce:combinedcorporatecostofinventoryandtransportation.26%annualcostreductionbyadjusting:Shipmentsizes(inventorypolicy)Routes(transportationstrategy)WhyIsInventoryImportant?WhyIsInventoryRequired?UncertaintyincustomerdemandShorterproductlifecyclesMorecompetingproductsUncertaintyinsuppliesQuality/Quantity/Costs/DeliveryTimesDeliveryleadtimesIncentivesforlargershipmentsHoldingtherightamountattherighttimeisdifficult!DellComputer’swassharplyoffinitsforecastofdemand,resultingininventorywrite-downs1993stockplungeLizClaiborne’shigher-than-anticipatedexcessinventories1993unexpectedearningsdecline,IBM’sineffectiveinventorymanagement1994shortagesintheThinkPadlineCisco’sdecliningsales2001$2.25BexcessinventorychargeInventoryManagement-DemandForecastsUncertaindemandmakesdemandforecastcriticalforinventoryrelateddecisions:Whattoorder?Whentoorder?Howmuchistheoptimalorderquantity?ApproachincludesasetoftechniquesINVENTORYPOLICY!!SupplyChainFactorsinInventoryPolicyEstimationofcustomerdemandReplenishmentleadtimeThenumberofdifferentproductsbeingconsideredThelengthoftheplanninghorizonCostsOrdercost:ProductcostTransportationcostInventoryholdingcost,orinventorycarryingcost:Statetaxes,propertytaxes,andinsuranceoninventoriesMaintenancecostsObsolescencecostOpportunitycostsServicelevelrequirements2.2SingleStageInventoryControlSinglesupplychainstageVarietyoftechniquesEconomicLotSizeModelDemandUncertaintySinglePeriodModelsInitialInventoryMultipleOrderOpportunitiesContinuousReviewPolicyVariableLeadTimesPeriodicReviewPolicyServiceLevelOptimization2.2.1.EconomicLotSizeModelFIGURE2-3:InventorylevelasafunctionoftimeAssumptionsDitemsperday:ConstantdemandrateQitemsperorder:Orderquantitiesarefixed,i.e.,eachtimethewarehouseplacesanorder,itisforQitems.K,fixedsetupcost,incurredeverytimethewarehouseplacesanorder.h,inventorycarryingcostaccruedperunitheldininventoryperdaythattheunitisheld(alsoknownas,holdingcost)Leadtime=0 (thetimethatelapsesbetweentheplacementofanorderanditsreceipt)Initialinventory=0Planninghorizonislong(infinite).DerivingEOQTotalcostateverycycle:Averageinventoryholdingcostinacycle:Q/2CycletimeT=Q/D

Averagetotalcostperunittime:

EOQ:CostsFIGURE2-4:Economiclotsizemodel:totalcostperunittimeSensitivityAnalysisb.5.8.911.11.21.52Increaseincost25%2.5%0.5%0.4%1.6%8.9%25%TotalinventorycostrelativelyinsensitivetoorderquantitiesActualorderquantity:QQisamultipleboftheoptimalorderquantityQ*.Foragivenb,thequantityorderedisQ=bQ*2.2.2.DemandUncertaintyTheforecastisalwayswrongItisdifficulttomatchsupplyanddemandThelongertheforecasthorizon,theworsetheforecastItisevenmoredifficultifoneneedstopredictcustomerdemandforalongperiodoftimeAggregateforecastsaremoreaccurate.MoredifficulttopredictcustomerdemandforindividualSKUsMucheasiertopredictdemandacrossallSKUswithinoneproductfamily2.2.3.SinglePeriodModelsShortlifecycleproductsOneorderingopportunityonlyOrderquantitytobedecidedbeforedemandoccursOrderQuantity>Demand=>DisposeexcessinventoryOrderQuantity<Demand=>Losesales/profitsSinglePeriodModelsUsinghistoricaldataidentifyavarietyofdemandscenariosdetermineprobabilityeachofthesescenarioswilloccurGivenaspecificinventorypolicydeterminetheprofitassociatedwithaparticularscenariogivenaspecificorderquantityweighteachscenario’sprofitbythelikelihoodthatitwilloccurdeterminetheaverage,orexpected,profitforaparticularorderingquantity.Orderthequantitythatmaximizestheaverageprofit.SinglePeriodModelExampleFIGURE2-5:ProbabilisticforecastAdditionalInformationFixedproductioncost:$100,000Variableproductioncostperunit:$80.Duringthesummerseason,sellingprice:$125perunit.Salvagevalue:Anyswimsuitnotsoldduringthesummerseasonissoldtoadiscountstorefor$20.TwoScenariosManufacturerproduces10,000unitswhiledemandendsat12,000swimsuits Profit =125(10,000)-80(10,000)-100,000 =$350,000Manufacturerproduces10,000unitswhiledemandendsat8,000swimsuits Profit =125(8,000)+20(2,000)-80(10,000)-100,000 =$140,000ProbabilityofProfitabilityScenarioswithProduction=10,000UnitsProbabilityofdemandbeing8000units=11%Probabilityofprofitof$140,000=11%Probabilityofdemandbeing12000units=27%Probabilityofprofitof$140,000=27%Totalprofit=WeightedaverageofprofitscenariosOrderQuantitythatMaximizesExpectedProfitFIGURE2-6:AverageprofitasafunctionofproductionquantityRelationshipBetweenOptimalQuantityandAverageDemandComparemarginalprofitofsellinganadditionalunitandmarginalcostofnotsellinganadditionalunitMarginalprofit/unit= SellingPrice-VariableOrdering(or,Production)CostMarginalcost/unit= VariableOrdering(or,Production)Cost-SalvageValueIfMarginalProfit>MarginalCost=>OptimalQuantity>AverageDemandIfMarginalProfit<MarginalCost=>OptimalQuantity<AverageDemandFortheSwimsuitExampleAveragedemand=13,000units.Optimalproductionquantity=12,000units.Marginalprofit=$45Marginalcost=$60.Thus,MarginalCost>MarginalProfit =>optimalproductionquantity<averagedemand.Risk-RewardTradeoffsOptimalproductionquantitymaximizesaverageprofitisabout12,000Producing9,000unitsorproducing16,000unitswillleadtoaboutthesameaverageprofitof$294,000.Ifwehadtochoosebetweenproducing9,000unitsand16,000units,whichoneshouldwechoose?Risk-RewardTradeoffsFIGURE2-7:AfrequencyhistogramofprofitRisk-RewardTradeoffsProductionQuantity=9000unitsProfitis:either$200,000withprobabilityofabout11%or$305,000withprobabilityofabout89%Productionquantity=16,000units.Distributionofprofitisnotsymmetrical.Lossesof$220,000about11%ofthetimeProfitsofatleast$410,000about50%ofthetimeWiththesameaverageprofit,increasingtheproductionquantity:IncreasesthepossibleriskIncreasesthepossiblereward

ObservationsTheoptimalorderquantityisnotnecessarilyequaltoforecast,oraverage,demand.Astheorderquantityincreases,averageprofittypicallyincreasesuntiltheproductionquantityreachesacertainvalue,afterwhichtheaverageprofitstartsdecreasing.Risk/Rewardtrade-off:Asweincreasetheproductionquantity,bothriskandrewardincreases.2.2.4.WhatIftheManufacturerHasanInitialInventory?Trade-offbetween:Usingon-handinventorytomeetdemandandavoidpayingfixedproductioncost:needsufficientinventorystockPayingthefixedcostofproductionandnothaveasmuchinventoryInitialInventorySolutionFIGURE2-8:ProfitandtheimpactofinitialinventoryManufacturerInitialInventory=5,000Ifnothingisproduced,averageprofit= 225,000(fromthefigure)+5,000x80=625,000IfthemanufacturerdecidestoproduceProductionshouldincreaseinventoryfrom5,000unitsto12,000units.Averageprofit= 371,000(fromthefigure)+5,000•80=771,000Noneedtoproduceanythingaverageprofit>profitachievedifweproducetoincreaseinventoryto12,000unitsIfweproduce,themostwecanmakeonaverageisaprofitof$375,000.Sameaverageprofitwithinitialinventoryof8,500unitsandnotproducinganything.Ifinitialinventory<8,500units=>producetoraisetheinventorylevelto12,000units.Ifinitialinventoryisatleast8,500units,weshouldnotproduceanything

(s,S)policyor(min,max)policyManufacturerInitialInventory=10,0002.2.5.MultipleOrderOpportunitiesREASONSTobalanceannualinventoryholdingcostsandannualfixedordercosts.Tosatisfydemandoccurringduringleadtime.Toprotectagainstuncertaintyindemand.TWOPOLICIESContinuousreviewpolicyinventoryisreviewedcontinuouslyanorderisplacedwhentheinventoryreachesaparticularlevelorreorderpoint.inventorycanbecontinuouslyreviewed(computerizedinventorysystemsareused)Periodicreviewpolicyinventoryisreviewedatregularintervalsappropriatequantityisorderedaftereachreview.itisimpossibleorinconvenienttofrequentlyreviewinventoryandplaceordersifnecessary.2.2.6.ContinuousReviewPolicyDailydemandisrandomandfollowsanormaldistribution.Everytimethedistributorplacesanorderfromthemanufacturer,thedistributorpaysafixedcost,K,plusanamountproportionaltothequantityordered.Inventoryholdingcostischargedperitemperunittime.Inventoryleveliscontinuouslyreviewed,andifanorderisplaced,theorderarrivesaftertheappropriateleadtime.Ifacustomerorderarriveswhenthereisnoinventoryonhandtofilltheorder(i.e.,whenthedistributorisstockedout),theorderislost.Thedistributorspecifiesarequiredservicelevel.AVG=AveragedailydemandfacedbythedistributorSTD=StandarddeviationofdailydemandfacedbythedistributorL=Replenishmentleadtimefromthesuppliertothedistributorindaysh=Costofholdingoneunitoftheproductforonedayatthedistributorα=servicelevel.Thisimpliesthattheprobabilityofstockingoutis1-αContinuousReviewPolicy(Q,R)policy–wheneverinventorylevelfallstoareorderlevelR,placeanorderforQunitsWhatisthevalueofR?ContinuousReviewPolicyContinuousReviewPolicyAveragedemandduringleadtime:LxAVGSafetystock:ReorderLevel,R:OrderQuantity,Q:ServiceLevel&SafetyFactor,zServiceLevel90%91%92%93%94%95%96%97%98%99%99.9%z1.291.341.411.481.561.651.751.882.052.333.08zischosenfromstatisticaltablestoensurethattheprobabilityofstockoutsduringleadtimeisexactly1-αInventoryLevelOverTimeInventorylevelbeforereceivinganorder=Inventorylevelafterreceivinganorder=AverageInventory=FIGURE2-9:Inventorylevelasafunctionoftimeina(Q,R)policyContinuousReviewPolicyExampleAdistributorofTVsetsthatordersfromamanufacturerandsellstoretailersFixedorderingcost=$4,500CostofaTVsettothedistributor=$250Annualinventoryholdingcost=18%ofproductcostReplenishmentleadtime=2weeksExpectedservicelevel=97%MonthSeptOctNov.Dec.Jan.Feb.Mar.Apr.MayJuneJulyAugSales20015210022128717615119824630998156ContinuousReviewPolicyExampleAveragemonthlydemand=191.17Standarddeviationofmonthlydemand=66.53Averageweeklydemand=AverageMonthlyDemand/4.3Standarddeviationofweeklydemand=Monthlystandarddeviation/√4.3

ParameterAverageweeklydemandStandarddeviationofweeklydemandAveragedemandduringleadtimeSafetystockReorderpointValue44.5832.0889.1686.20176Weeklyholdingcost=Optimalorderquantity=Averageinventorylevel=679/2+86.20=426ContinuousReviewPolicyExampleAverageleadtime,AVGL

Standarddeviation,STDL.

ReorderLevel,R:2.2.7.VariableLeadTimesAmountofsafetystock=OrderQuantity=InventorylevelisreviewedperiodicallyatregularintervalsAnappropriatequantityisorderedaftereachreviewTwoCases:ShortIntervals(e.g.Daily)DefinetwoinventorylevelssandSDuringeachinventoryreview,iftheinventorypositionfallsbelows,orderenoughtoraisetheinventorypositiontoS.(s,S)policyLongerIntervals(e.g.WeeklyorMonthly)Maymakesensetoalwaysorderafteraninventorylevelreview.Determineatargetinventorylevel,thebase-stocklevelDuringeachreviewperiod,theinventorypositionisreviewedOrderenoughtoraisetheinventorypositiontothebase-stocklevel.Base-stocklevelpolicy2.2.8.PeriodicReviewPolicy(s,S)policyCalculatetheQandRvaluesasifthiswereacontinuousreviewmodelSetsequaltoRSetSequaltoR+Q.Base-StockLevelPolicyDetermineatargetinventorylevel,thebase-stocklevelEachreviewperiod,reviewtheinventorypositionisreviewedandorderenoughtoraisetheinventorypositiontothebase-stocklevelAssume:

r=lengthofthereviewperiod L=leadtime AVG=averagedailydemand STD=standarddeviationofthisdailydemand.

Averagedemandduringanintervalofr+Ldays=SafetyStock=Base-StockLevelPolicyBase-StockLevelPolicyFIGURE2-10:InventorylevelasafunctionoftimeinaperiodicreviewpolicyAssume:distributorplacesanorderforTVsevery3weeksLeadtimeis2weeksBase-stocklevelneedstocover5weeksAveragedemand=44.58x5=222.9Safetystock=Base-stocklevel=223+136=359Averageinventorylevel=Distributorkeeps5(=203.17/44.58)weeksofsupply.Base-StockLevelPolicyExampleOptimalinventorypolicyassumesaspecificserviceleveltarget.What